Travelers Insurance v. Hermann

Offutt, J., delivered the opinion of the Court. On the 9th day of February, 1920, Edwin C. Hermann was employed under a written contract by the Travelers Insurance Company, of Hartford, Connecticut, hereafter referred to as the company, as a soliciting agent to solicit and transact life, accident, and health insurance. For such services the company agreed to pay him commissions on original policies issued through him, in accordance with a schedule of rates included in the contract, and five per cent, on renewal premiums on policies of life insurance originally issued through his efforts, on which one year’s premium had been paid and where the business was satisfactory to the company. That agreement, so far as it relates to the commission on renewal premiums, provided, however, that the agent should not be entitled to such premiums, if (1) the agent left the service of the company and endeavored to take an agent from its service, or induced one of its policy holders to relinquish a policy in the company, or (2) if within one year from the termination of the contract he entered the employ of any other life insurance company to work in the territory described as “Baltimore and vicinity (Haryland),” or (3) if he had violated any of his obligations under the contract. ¹⁷⁴ It also provided that either party might terminate it upon seven days’ notice.

Herman remained in the company’s employ until November 22nd, 1924, when he resigned. His resignation was accepted by the company to become effective on December 15th, 1924, and his employment as its agent ceased on that day. Before he left the company, he had one of its employees make a list of persons holding policies which he had written, from a book which he had, and he sent a copy of the following letter to each person named on that list: “You have received a letter from Messrs. Apple & Bond, advising you of my resignation as of December 15. “I resigned, because I was offered a general agency of the Missouri State Life Insurance Company of Saint Louis, Missouri.

A company with over five hundred million dollars of insurance in force and with rates equal to those of any other company. “Por five years I have sought just such an opportunity as the Missouri State Life Insurance Company offered me. Prom time to time I advised the management of the Travelers Insurance Company of my desires, and they repeatedly assured me that when the opportunity presented itself I would have their cooperation, and that the renewals on the business I had and was continuing to put on their books would be paid to me as though I was still in their employ, providing I would co-operate in the collection of the same; this I willingly and anxiously agreed to do in my resignation. “The management, in accepting my resignation, instead of living up to their repeated promises, curtly and emphatically advised me I would have to live up to the contract, which contains a one-year clause prohibiting me from soliciting insurance in this territory. “I want you and all my policy holders to know how much I appreciate the business that you have given me, and while I cannot render you the personal service I would have been able to, had Messrs. Apple & Bond lived up to their verbal agreement with me, I ¹⁷⁵ can assure you that, while I am on probation, should anything come up pertaining to the insurance you have purchased from the Travelers through me or any new insurance you may wish to consider, I can arrange to have a man call on you who will be glad to attend to your every want.” At that time he had no regular connection with the Missouri State Life Insurance Company, although he wrote some insurance for it under a license which authorized him to write insurance for it in the‘City of Washington, and which had heen issued in the preceding May. That license as originally issued authorized him to do “surplus and substandard” business for the Missouri company in “Baltimore and vicinity” as well as any “general business” in Washington.

When he resigned from the company, he notified it that he had cancelled his license to do “surplus and substandard business” for the Missouri company in Baltimore and vicinity, but (although it does not appear that he SO' notified the company) he still retained his authority to do any general business for it in Washington. When he left the Travelers’ Company he gave up his Baltimore office, but kept a desk in the office of Mr. George Lilly, an agent of the Missouri Company, in the Fidelity Building in Baltimore. During his connection with the company, he had written a number of life insurance policies on which renewal premiums were paid after he had left its employ, and he claimed the right to a five per cent, commission on such premiums under the following clause in his contract: “If this contract shall be terminated after the agent has been continuously in the service of the company under this or any previous contract for two or more years, or shall be terminated by the death of the agent, and if the agent has not violated any of his obligations hereunder, the company will pay the renewal commissions earned under part 2, to the agent, his executors, or administrators, or to such person as he may designate with the consent of the company.” The company paid him Ids commissions on renewal pre ¹⁷⁶ miums oil insurance which he had written until April, 1925, when they stopped. He thereupon demanded that they continue to pay such commissions, hut they refused, and on March 29th, 1926, he brought this action to recover the commissions which he then claimed to be due him, which resulted in a judgment in his favor for $1,438.35, from which this appeal was taken.

There are four exceptions in the record, one relating to the prayers and three to rulings on questions of evidence. The appellee’s contract with the company contained the following clauses relating to his right to collect commissions on renewal premiums: “If the agent' shall leave the service of the company and endeavor to take an agent of the company away from its service, or shall induce a policy holder to relinquish a policy or policies in the company, the agent shall forfeit any interest in commissions that he might otherwise be entitled to under this or previous contracts. “Ho assignment of commissions earned or accrued or to accrue under this contract shall be valid unless authorized in writing by the company. * * * “If the agent shall at any time within- one year from date of the termination of this contract for any cause whatsoever enter the employment of any other life insurance company to work in the territory specified in section 1, all right to further commission on renewal premiums shall cease with the date of such employment.” And the appellant’s contention is, that the evidence in this case conclusively proves that Hermann did induce persons holding policies issued by it to relinquish the same, and that he did take employment “to work in the territory specified in section No. 1,” to wit, in “Baltimore and vicinity (Maryland),” and that therefore he was not entitled to commissions on renewal premiums which otherwise would have been due him. In connection with both of these issues, the appellant offered the testimony of Captain C. C. Canon, who testified ¹⁷⁷ in chief that Hermann, accompanied by Lilly, had visited him in March, 1925, and that, as he had a policy with the Travelers Insurance Company expiring at about that time, he gave Hermann an application for a policy with the company with which Hermann was then employed, and that he also gave Hermann a cheek for forty dollars in payment of the premium on that policy. He also said, on his cross-examination, that he had a $4,000 life insurance policy which Hermann had written for the Travelers Insurance Company, which he “dropped.” He was then asked, “Well, you dropped that at the instance of Mr. Rhodes with the Travelers ?” The court overruled an objection to that question and that ruling is the subject of the first exception.

While the witness had said nothing in chief about life insurance, it appears from his subsequent cross-examination that the purpose of the question was to ascertain whether the forty dollars check may not have been given in payment of the balance due on an old note for a life insurance premium. Such an inquiry was germane to the witness’ testimony in chief, was relevant and material, and we find no error in that ruling. Jacob L. Idov was called by the defendant, apparently to prove that he had taken out a life insurance policy in the Missouri State Life Insurance Company through Hermann within the year next ensuing after December 15th, 1924, but he denied point blank that he had ever seen Hermann in connection with any insurance matter within that period. He was then asked: “Did you, on July 30th, 1925, make to the Travelers Insurance Company this statement: ‘When I bought policy No. 515176 in the Missouri State Life Insurance Company, I intended to. lapse No. 919197, but desire to apply for re-instatement and borrow full loan value on the policy.

At the time I bought Missouri State policy from Mr. E. C. Hermann, I informed Mr. Hermann I intended to drop Travelers Insurance policy but 1 now desire to continue same.’ Did you make that written statement?” He answered that he did not write the statement, but that it was dictated and he signed his name. He further testified that the letter was written by Mr. Ottcnheimer and dictated by ¹⁷⁸ Mr. Apple ('agents of the appellant), and. that he was induced to sign it under protest; that Apple told him that there was some money due him on a policy hut that he could not get it unless he signed the letter; that he did sign the letter and afterwards a check for fifty or fifty-five dollars was sent him. He further testified that he did not give Apple and Ottenheimer the facts from which they dictated the letter, and that, although he protested repeatedly, he was told that he could not get the money without signing his name, “because the company needs this”; that he did not tell Apple, anything, but that he “made this letter up.” Ottenheimer was then called and, after testifying that Idov had made a statement to him on July 30th, 1925, with regard to a policy of insurance in the Missouri State Life Insurance Company, was asked what statement he made on that date. An objection to that question was sustained, and the witness was then asked whether on that occasion Idov had made “a statement to you which you reduced to writing in his presence, by which he said that he had bought-policy No. 515176 in the Missouri State Life Insurance Company, and that when he bought the policy he intended to lapse No. 919197 in the Travelers Insurance Company, but now desired to apply for reinstatement and to borrow the full loan value on the Travelers policy; that at the time he bought the Missouri State policy from Mr. E. C. Hermann, he informed Mr. Hermann that he intended to drop the Travelers policy, but he now desired to continue the same.” An objection to-that question was also sustained and those rulings are the subject of the second and third exceptions.

The appellant contends that it was surprised by the testimony of the witness, and that these questions were admissible, not to impeach him, but to explain why it called him. Murphy v. State, 120 Md. 234 ; Wash., B. & A. Elec. R. Co. v. Faulkner, 137 Md. 451 . The appellee on the other hand says that such evidence could only have been admitted to explain the surprise occasioned by the witness’ testimony, and that, since Idov had on the stand admitted that he had made a contradictory statement, he admitted the only thing which appellant was entitled to ¹⁷⁹ prove, and that therefore the testimony was unnecessary and immaterial.

But an examination of Idov’s testimony shows that he had made no such admission. What he admitted was signing the letter, hut he emphatically denied making the statement, but on the contrary said that Apple “made the statement up” and that he signed it to get fifty or fifty-five dollars. The statement was wholly at variance with his sworn, testimony, and if in fact he had made it, appellant was entitled to show that fact, to explain why it called him, if it was injured by his testimony. It would be grossly unfair to permit a witness to entrap a party into calling him by making a statement favorable to that party’s contention, and then, when he is called and accredited by that party and gives testimony at variance with his previous statement and against that party’s interest, to deny the party calling him the right to show that he was induced to do so by a previous statement of the witness, made under such circumstances as to warrant a reasonable belief that the witness would repeat the statement when called to testify.

Murphy vs, State, supra; Wash., B. & A. Elec. R. Co. v. Faulkner, supra; Smith v. Briscoe, 65 Md. 569 . These eases limit the right of the party claiming to be surprised to the proof of statements made to the party calling him or his attorney, but where a corporation is a party, manifestly a statement made to its agent is within the rule, because necessarily a corporation can only act through an agent, and any other construction would in most cases deprive corporate defendants of the protection which the rule affords. It is not “every statement that may be made even to the party litigant or his attorney, that should be allowed to be contradicted by the party calling the witness.

It should be left to the discretion of the judge before whom the case is tried below to allow it to' be done. The court should be satisfied that the party has been taken by surprise, and that the evidence is contrary to what he had just cause to expect from the witness based upon his statements, and that such statements were about material facts in the case. It is not every light or trivial circumstance that would justify it.” Smith v. Briscoe, supra. And it must appear too that ¹⁸⁰ the evidence of the witness is prejudicial to the party calling him, and it is not sufficient to show that it is not beneficial to him, or that it disappoints his expectations, even though justified. 28 R. C. L. 646.

Applying these principles to the issue before us, we are unable to find any error in these rulings. Idov’s testimony was wholly negative, in so far as it related to the issues in the case. He did, indeed, according to his statement on cross-examination, say that defendant’s agents .paid him to make a false statement, but these questions did not refer to that circumstance. And aside from that statement, which is not involved in these rulings, he said nothing which could have hurt the appellant’s case, but the most which could be said of his testimony was that it did not help it.

The remaining exception involves the rulings on the prayers. The most important question presented by this exception is raised by the refusal of the appellant’s first prayer, which was a formal demurrer to the evidence. It is based upon these propositions: (1) that by a true construction of Hermann’s contract of employment with the company, he was not entitled to recover (a) if within one year from the termination of his employment by the company he sold any insurance to persons living “in Baltimore and vicinity,” whether the transaction took place in that territory or not, or (b) if he induced any person holding a policy in the company to relinquish it; and (2) that the undisputed'evidence shows that he did sell insurance to persons living in Baltimore and vicinity, and that the transactions incident thereto took place both within and without that territory, and that he did induce policy